Economics%20116%20-%20Lecture%2019%20-%20Final

Economics%20116%20-%20Lecture%2019%20-%20Final - Economics...

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Economics 116: Economic Development UC San Diego, Spring 2009 Prof. Karthik Muralidharan Department of Economics Lecture 19
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Administrative Stuff PS 3 answers and PS 4 - Part A online Office Hours None tomorrow Thursday: 3:45 –5:00pm Friday: 5:45 - 6:45pm Monday: TBD (2 hour course review) Final 3:00 - 6:00pm on Tuesday, 9 June (next week) NO CALCULATORS We will have calculations, but they won’t require calculators
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Lecture Outline (6/2/09) Modeling Government Social Welfare Maximizer Rent-Seeker Somewhere in between - state capacity
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Modeling Government Motivation at the start of the course: “What policies can be adopted to improve economic growth and development in LDC’s” But who makes and enacts policies? The government! What is the government and what does it maximize? First view - government as social welfare maximizer Second view - government as rent-seeker Third view - somewhere in the middle! Wide variation in government performance, and therefore need to understand “state
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Lecture Outline (6/2/09) Modeling Government Social Welfare M aximizer Rent-Seeker Somewhere in between - state capacity
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Why Government Intervention? Pure public goods Law and order; defense; regulation Market failures Coordination failures (Big push, etc) Externalities (negative - pollution; positive - learning spillovers) Missing/incomplete markets (savings, insurance, credit, etc) Paternalism Seat belt laws, social security, retirement savings New movement towards “benign paternalism” Income distribution NOT a market failure But normative case for intervention Rights of children and of future generations Different discount rates
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Social Welfare Maximizer Implicit in almost all our discussions We identify market failures, and focus on policy
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Economics%20116%20-%20Lecture%2019%20-%20Final - Economics...

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